Twenty years ago, Emerging Trends in Real Estate from the Urban Land Institute and PwC defined the two types of cities that dominated the landscape: smaller cities that operated around standard 9-5 business hours and large metropolitan areas that ran all 24 hours of the day. And while your ability to get a slice of pizza at 3:00 AM doesn't seem like the most logical of real estate predictors at first, in practice the numbers don't lie. Analyzing and comparing cities using the lens of this basic divide gives interesting context to how their investment capital flows and housing prices have shifted since that prediction--with the advantage favoring cities that don't have a bedtime and their neighboring suburbs.
In recent years, many mid-size cities have begun to adopt a middle of the road approach incorporating the excitement and opportunity of large cities with the restive periods of a quieter hollow. These 18 hour cities are beginning to make waves in real estate rankings, and Emerging Trends lists them as their first major trend of 2015. What is underpinning this new movement in real estate, and why do these cities have so much appeal?
Okay, so 18 hour cities combine the best of 24-hour and 9-5 cities. But what does this mean in practice? The core of an 18 hour city is downtown revitalization. For decades, many downtown cores in small to mid-sized cities were abandoned after work hours by workers who lived in the suburbs. Movement out of city centers was widespread, and downtown tenants were predominantly made up of the working poor. This generated little commerce for downtown businesses in the evenings, which made business and generating tax revenue for municipal upkeep difficult. With the rise of New Urbanism over the past several decades however, increasing popularity for urban areas that caused the real estate pushes in major cities like San Francisco or New York have inspired a type of forward thinking urbanity and policy in smaller cities.
Transforming downtown areas so that they incorporate modern housing and improved walkability to local restaurants, retail, and entertainment--especially when combined with improved infrastructure for cyclists and public transit--makes them appeal to a more affluent demographic. As Emerging Trends notes, these adjustments "encourage employers in the knowledge and talent industries to keep their offices downtown." Access to foot traffic and proximity to transit allows the type of entertainment-oriented businesses such as bars and restaurants to stay open later, which attracts both younger, creative workers and baby boomers nearing retirement alike. Because of their smaller size, most keep hours that allow people to enjoy themselves, then have some quiet in the wee hours (as opposed to large major cities like Manhattan, where the buzz of activity is ongoing).
These under-the-radar cities are rapidly on the rise and offer great opportunities for homeowner investment. Among the fastest risers, a diverse and vibrant economy attracted to the urban core offers stable employment for residents. Cities such as Raleigh-Durham, Charlotte, and Denver are among the top ten overall scores listed by Emerging Trends, and other diversifying economies such as Greenville and Charleston are developing rapidly. "The right urban mix bolsters occupancy," they write, "that density raises values, and that vibrancy attracts investment capital." This phenomena can be observed in many emerging cities following the 18 hour model, such as Denver where home sales and prices are outpacing the US average considerably. For wise homeowners, following this investment money to 18 hour cities means more development and the likelihood of strong home appreciation.
|Based in Los Angeles, CA, Nicholas Brown has been writing since 2008. He holds a Master of Arts in English from Northeastern University. His professional interests include sustainable living, personal finance, real estate and investment trends. He writes for JustRentToOwn.com.|